Types of Audit

An audit can take different forms, performed at different stages in the financial year and for different purposes and reasons.  We take a brief look at some of the types of audit.

 1.   Non – Statutory Audit

This type of audit is not done to meet statutory requirement but the audit is requested by a stakeholder for specific purposes.  The scope and timing of this type of audit are determined by the interested party.  This type of audit is also referred to as Private audit. Some stakeholders who may commission this type of audit are the board of directors, shareholders, Vendors, Banks, Civil societies, Management and Securities Commission.

2.   Statutory Audit

This is the type of audit required by law.  It is the statutory obligation which should be fulfilled at all cost.  Normally the provisions of the law determine the scope and timing of the audit.

 3.   External Audit

This is the type of audit carried out by qualified persons/body from outside the company being audit.  Statutory audit falls under this type of audit. These auditors are independent and objective and should not be influenced by the management of the company.

4.   Internal Audit

This is the type of audit carried out by persons who are full-time employees of the company being audited.  This type of audit is detailed and frequent.  The aims of internal audit are to ensure efficiency and effectives of operations and timely detection of error and fraud.

5.   Difference between External Auditor and Internal Auditor

Internal Auditor	External Auditor
Full –time employee of the company	Not an employee of the company
Duties and scope of work determined by management of the company	Duties and scope of work determined by law
Reports to the audit committee/management	Reports to the shareholders
Objectives are to identify lapses and make recommendations	Objective is to express opinion on the financial statements

 6.   Complete Audit

This is the type of audit which is started and completed within a time frame in the period.  This type of audit is used in organizations where internal controls are strong and transaction volume is low.

7.   Interim Audit

This is the type of audit which is carried out during the financial period before the final audit is done at the end of the period.  This type of audit is used to minimize the work to be done at the end of the period and is used where transaction volume is expected to be high. Interim audits are normally done quarterly but they could be done monthly or b-annually.

8.   Continuous Audit

This is the type of audit in which checking/audit works are carried out throughout the financial period.  Continuous audit is used in situations where assessed internal control is weak and transaction volume is high.